The chaos of compensation

By Michael Pinto-Duschinksy, November 30, 2010

The Jewish Claims Conference is back in the news. Seventeen people in New York, where the organisation has its headquarters, have been charged with making fraudulent claims for Holocaust compensation from the German government to the value of £27 million. Five have already admitted their guilt.

Judging from the Claims Conference's reactions, there is little cause for criticism. Only six of the 17 accused are or have been its employees. The US Attorney for Manhattan has praised the organisation's "extraordinary co-operation" in bringing the fraud to the attention of the FBI. The amounts stolen "come to less than one per cent of total payments". Control procedures have been "revamped". Relevant to some is the fact that the thefts have been from the German authorities and not from Jewish pockets.

The scam involved the forgery of documents, which according to the FBI led to the approval of over 5,500 payments during a period of more than a decade to persons not entitled to receive them. In return, Claims Conference case-workers took kickbacks.

It seems the Claims Conference has become increasingly accident-prone and ineffective at representing the vital interests of the survivors of the Nazi concentration camps, slave labour factories and ghettoes, making it easier for German and Austrian governments to evade their responsibilities.

It is easy to obtain an artificially rosy view of German compensation by looking at the total sums involved and not at the small payments going to each individual. The Claims Conference has huge assets derived mainly from the German government. Its net reserves at the end of 2009 were £445 million. In 2009 alone, it spent £425 million.

Yet it secured compensation amounting in total to a mere £5,000 for each slave labourer who survived Auschwitz and similar places of terror. To add insult to injury, the settlement to Jewish slave labour claims accepted by the Conference in the 1990s failed to obtain from German corporations that had participated in the Holocaust any statement of legal liability. Jews accepting the offered £5,000 were obliged to sign away their rights.

In contrast to the £5,000 per slave labourer, those heading the Jewish side in the negotiations - class-action lawyers, leaders of some major Jewish organisations, as well as the top professionals employed by the Claims Conference - fared far better. Several lawyers who assured me during the negotiations that they were acting pro bono walked away with fees amounting to millions of dollars. The executive vice-president of the Claims Conference took home a salary and benefits in 2008 of more than £300,000.

The justification for Claims Conference officials' salaries has been that top people require appropriate pay. Yet it is arguable that too high a reward may tend to attract executives for whom financial reward rather than conviction is the underlying motive. Besides, it contrasts with the miserly sums won for Holocaust slave labourers.

While many elderly Holocaust survivors around the world live in poverty, the Claims Conference has diverted many millions of dollars of their money to projects for Holocaust research and various prestige activities.

From the 1990s, some Jewish owners of property in the former East Germany were shocked to discover that the Claims Conference had arranged with the German government to assume ownership of them if the actual owners were late in filing their claims.

In 2007, Rabbi Israel Singer stepped down as Conference president in the wake of accusations by the New York State attorney general of financial improprieties at the World Jewish Congress. More recently, victims of Nazi medical experiments have taken the Conference to court in Israel.

The core problem is the organisation's lack of democratic accountability - into which the UK Board of Deputies wisely has launched an inquiry. Formed originally as a body representing Jewish organisations around the world to make material claims against Germany, it has become a self-sustaining institution with too little connection with the Jewish communities from which its directors are drawn.

It is not for nothing that those political adversaries, the Jerusalem Post and Ha'aretz, have published similar attacks against it. The Conference was described in Ha'aretz as "the richest, most powerful and least answerable old-boys network in the Jewish world."

No group is more deserving of the support of organised Jewry than the survivors of Nazism. Their welfare in later life must be the prime obligation of the Claims Conference and a matter of honour for Anglo-Jewry.

Michael Pinto-Duschinksy is a consultant to the Committee on Standards in Public Life.

Last updated: 11:47am, November 30 2010